alertmeipp Posted September 8, 2011 Share Posted September 8, 2011 I am hoping they will "resume" some dividend. 20% will be a good start? 8) Link to comment Share on other sites More sharing options...
cwericb Posted September 8, 2011 Share Posted September 8, 2011 Okay, I'll agree to that, any chance of us getting elected to the board of directors? :) On the other hand, if I dump this I can pretty well guarantee that NBSK will jump, the US plants will be sold at a huge profit, the power generation plant will come on early, and a special dividend will be declared. Link to comment Share on other sites More sharing options...
alertmeipp Posted September 8, 2011 Share Posted September 8, 2011 I don't really see many stocks that see cheaper than FBK in cash flow basis but FBK has been cheap for so long, ppl have lost hope. Link to comment Share on other sites More sharing options...
Uccmal Posted September 8, 2011 Share Posted September 8, 2011 Well, I am completely out of fbk. Too many better opportunities, and I am having trouble putting an upside stock price on fbk right now. The commodity appears to be on a downswing. I may revisit if the price backs off some more. I still have heard nothing about the power gen. project. You would think with the numbers that Mercer is getting that this would be front and center and being publicized by fbk. Link to comment Share on other sites More sharing options...
Uccmal Posted September 9, 2011 Share Posted September 9, 2011 For me going forward this will be never more than a Walter Schloss type position - say 5% maximum at inception. For comparison FFH makes up around 25% these days. Link to comment Share on other sites More sharing options...
biaggio Posted September 9, 2011 Share Posted September 9, 2011 what is a Walter Schloss type position? Link to comment Share on other sites More sharing options...
cwericb Posted September 9, 2011 Share Posted September 9, 2011 This dosen't sound good. Fibrek Inc. (FBK) : The pulp maker extended the scheduled shutdown of a mill in Fairmont, West Virginia, citing high waste-paper prices, according to a press release distributed by CNW Group Ltd. Link to comment Share on other sites More sharing options...
rranjan Posted September 9, 2011 Share Posted September 9, 2011 what is a Walter Schloss type position? Schloss took investment courses taught by Graham at the New York Stock Exchange Institute. He used to hold diversified porfolio of cheap stocks and did 15% annulized returns over a very long period ( I think 50 years or so) . He was not much of a Fisher style investor rather simply bought cheap stocks. So Walter Schloss type means a small holding in someones portfolio. Link to comment Share on other sites More sharing options...
alertmeipp Posted September 10, 2011 Share Posted September 10, 2011 well, it's not like RBK is contributing to the earning much. but we can say for certain nobody will pay anywhere near book for those RBK plant. Link to comment Share on other sites More sharing options...
Uccmal Posted September 10, 2011 Share Posted September 10, 2011 Walter Schloss sometimes held up to 200 stocks in his portfolio. His returns were around 20%/annum over his entire career. He used simple checklists that Graham had developed when he worked at Graham-Newman to vet stocks. Buffett often is cited as making fun of Walter due to the nature of his holdings. http://www.schloss-value-investing.com/2010/07/walter-schloss-presentation-at-the-benjamin-graham-center-for-value-investing/#more-70 He was 93 when that video was done 2 years ago. Link to comment Share on other sites More sharing options...
Uccmal Posted October 3, 2011 Share Posted October 3, 2011 Hey all, have a look at CFX - shares are way down. These guys have everything that one would want from fbk after the full turnaround. Cant say whether they will maintain the distribution but I do know it wont be going to pay for power or service debt. Link to comment Share on other sites More sharing options...
alertmeipp Posted October 5, 2011 Share Posted October 5, 2011 okay.. who got shares at 63 cents today? Link to comment Share on other sites More sharing options...
triedtestedand Posted October 5, 2011 Share Posted October 5, 2011 Or rather ... who sold? And why? Presumably a) liquidity issue (share volumes have been super low the past few months), b) capitulation and/or frustration, c) flight from (perceived) risk, d) better opportunity elsewhere, e) change in analysis of company and/or industry go-forward prospects. Have been seeing announcements of NBSK October price reductions in N. America to $950, down from recent $1030 highs in July ... that's worrying of course, but not so much when it is offset entirely by CDN dollar plunging to $.95 USD. Correlation, or causation? And now to the release announcement coming up in 4 weeks ... As of June 30th quarter, FBK's total liabilities were essentially equal to their current assets, so this latest quarter should be a transition quarter in my mind. With debentures paid, with revolving credit line trending to zero, and with term loan still a long-way from due (and backed by their inventories, and due to a friendly lender), FBK are now in a position of leveraging generated cash much more flexibly .. and I'd argue for a balance of building up cash cushion (to ensure reserve), but also to start buying back stock -> especially if it is $.63 per share!!!! ;-) I'm feeling like a stock pumper on this one. I have to admit, the stock performance has certainly been Rodney Dangerfield like (i.e. no respect), but all the other "darling" alternative associated w pulp (CFX, MERC, etc) have dropped precipitously as well. SharperDingaan ... you've been quiet on this one for a while. Any recent changes/updates in thoughts? Link to comment Share on other sites More sharing options...
Uccmal Posted October 5, 2011 Share Posted October 5, 2011 Two things I would like to see beforeI reinvest: 1) share price below 50 cents. 2) the power plant being constructed Link to comment Share on other sites More sharing options...
SharperDingaan Posted October 5, 2011 Share Posted October 5, 2011 We have been quiet buyers at < .75-.80. As long as you dont have to sell & can take a long view you will do very well. Buying (today) in a TFSA account, & contributing (later, & at 1.25+?) to a RRSP account, is the obvious choice. But not a fan otherwise. There are so many other very high quality choices out there right now offering div yields > 4%, &/or P/E's < 5.5-6.0, that FBK is pretty far down the list. SD Link to comment Share on other sites More sharing options...
alertmeipp Posted October 19, 2011 Share Posted October 19, 2011 guys, up 20% today! (Volume is lousy.) Link to comment Share on other sites More sharing options...
gordoffh Posted November 3, 2011 Share Posted November 3, 2011 http://www.fibrek.com/static/en/PDF/communiques/News_Q3_2011_Eng.pdf Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 3, 2011 Share Posted November 3, 2011 Nice to see the results of all the changes finally get traction on the financials. http://www.fibrek.com/static/en/PDF/infoFinanciere/rapports_de_gestion/2011_3Q_MDA.pdf Keep in mind that the new RBK product is probably a higher margin product, it hits the market this quarter, & most buyers would probably prefer volume under cost plus pricing if the product is a hit. The losses on the LOB are unlikely to continue, & the business risk is likely to continue declining. Power generation commences 12 months out & is proceeding as planned. Most folks will recognize that the future earnings stream will need to be PV'd into the 1 yr forward earnings projection, & that the closer we get to generation the higher the PV impact will be. Pulp prices have to soften by > 30% to offset the hedge from that future power generation. Elegant. SD Link to comment Share on other sites More sharing options...
Uccmal Posted November 3, 2011 Share Posted November 3, 2011 Finally, the got the damn power project in motion. I am not buying any yet, even though I am impressed with the numbers. Mercer is trading similarly cheap, as is CFX and both are in much better shape. Mercer is selling power now; cfx has no debt, pays a dividend, and easy access to asia. Link to comment Share on other sites More sharing options...
FFHWatcher Posted November 3, 2011 Share Posted November 3, 2011 Sharper; It sounds like you are suggesting that FBK should receive a valuation 'upgrade' due to the electricity revenue (aka a pop in the share price?). Fundamentally I agree, however I don't know of any other company that has added electricity generation revenue that has received a higher valuation in the stock market. I only follow a few, so I could be off on this one. It is possible that the electricity revenue is simply offsetting the erosion in the rest of their business? As a shareholder, I would love to see the day come where the pulp business is self supporting and the electricity revenue to paid out to shareholders in the form of a dividend. I suspect this day is either far off or will never come, although CFX has been paying out healthy dividends and with FBK's low level of debt (compared to MERC who has one of their mills highly leveraged but segregated), they may be next in line to restart some sort of small dividend but I think they need to get their RBk/US division running a lot more profitably before that were to occur. Link to comment Share on other sites More sharing options...
triedtestedand Posted November 3, 2011 Share Posted November 3, 2011 On the balance sheet, based on the major line items, they've hit an inflection point this quarter: Accounts Receivable =~ Accounts Payable Inventory =~ Debt As such, if you close off AP+Debt with those current assets, what's essentially left is a business with PP&E currently generating $50M+/yr of cash, with market cap of <$120M. Hmm ... Here's one lingering question I have for the group ... Does anyone have any insight on the long-standing "tax reassessment" issue? The company has >$300M in accumulated deficit that could shield them from taxes for a looong time. It looks like the two sides are finally talking (see below excerpt from the MD&A): ----------- TAX REASSESSMENT In January 2009, Fibrek received notices of assessment for the 2002 and 2003 taxation years from the Canada Revenue Agency (“CRA”) and the Ministère du Revenu du Québec (“MRQ”) reassessing the tax value allocated to the assets of the Saint-Félicien Mill at the time such assets were purchased by Fibrek from Abitibi-Consolidated Inc. in August 2002. These assessments do not involve any taxes payable. In October 2009, Fibrek requested a statement of revised losses from CRA and the MRQ. In September 2010, the Company received from CRA a statement of revised losses. In December 2010, the Company filed a notice of objection within the prescribed delay. The CRA has since acknowledged receipt of Fibrek’s notice of objection. An introductory meeting between Fibrek representatives and CRA took place in October 2011. Further meetings will be scheduled and a timeframe will be given once the enterprise valuator of CRA has reviewed the Company’s file. A reduction in the value allocated to certain assets would reduce the amount of Canadian non capital losses available to reduce future taxable income, among others. Management used its best estimate of the outcome of the tax reassessment in its calculation of future income taxes. The outcome of the tax reassessment may require an adjustment to the recognized future income tax amounts. This adjustment or any revision of the estimation would be recognized in the interim consolidated financial report of Fibrek and the impact could be material. --------------- Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 3, 2011 Share Posted November 3, 2011 We think the investment community will need to re-assess. It is hard to make the case that a down-turn in the pulp cycle will hurt, when there is maybe 4-6M/yr of power generation EBITDA coming on stream in 12 months. An analyst cannot afford to ignore its existence, & the valuation hedge that it provides. It is hard to make the case that price driven market substitution to lower grade RBK will hurt, when they have a significant new product in this LOB at the beginning of its product life cycle. Not recognizing that the segments trend may well reverse, & soon, could be a career limiting error. It is hard to argue that the high industry leverage ratio applies to them too when they are cash heavy, their leverage is trending down & is probably at/near the record industry low. If anything, they should be terming out &/or taking on new debt at today’s record low rates. The negative is that < $5/share, FBK is difficult for most institutions to trade. Impossible to take an activist role to force a break up &/or an acquisition, & hard to acquire any meaningful float without driving the price up. In practical terms, you can only buy & hold, & most institutions cannot buy because the price is <$5/share. Their competitors may be dogs – but at least you can trade them! Hard to see why the price would not rise to about the average cost base of the institutions holding it, as the restructuring risk has effectively gone. Long term there needs to be a share consolidation, but we don’t see it happening until the power generation is on line. SD Link to comment Share on other sites More sharing options...
alertmeipp Posted November 12, 2011 Share Posted November 12, 2011 Finally got time to go through the numbers, I agree with their leverage, no way they should be paying ~7.5% (from memory). But as they pay down the debt, 1% - 2% is become more and more irrelevant. With their power revenue coming online, they can afford the current leverage. (power revenue ~covers interest expense). They should start either shares buyback and then issue dividend. Is inventory built up a concern? Link to comment Share on other sites More sharing options...
SharperDingaan Posted November 12, 2011 Share Posted November 12, 2011 Assume the debt has a refinancing penalty that makes it uneconomic - until it rolls-over, there is little they can do. Business wise they are pretty much limited to strengthening their value proposition, & their Balance Sheet, for the next 12-18 months. Depending on the method used, the IV is maybe 2.25-2.75/share. Given that it is highly unlikely the market is going to pay that - the best interim prospect is periodic share buybacks. Buybacks financed with new debt at dirt-cheap rates, repaid from future free cash-flow over the next 12-18 months. If you applied the Greenblatt approach & held for 3 years, most would argue that you could do very well. Taleb (The Black Swan, Fooled By Randomness) would hedge against a lower return higher probability equity. WEB would consider the tax position. Not for the rabbit footed - but if you want to practice applying the craft, there are probably few better places for the price. SD Link to comment Share on other sites More sharing options...
alertmeipp Posted November 12, 2011 Share Posted November 12, 2011 The key is RBK, it's losing money now. If they can turn it around and merely produce a stable (cost plus) 5million earning per quarter. It will be a huge winner. Link to comment Share on other sites More sharing options...
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